I have 18 acres in fayette county right off 609 between Flatonia and LaGrange. Southern Bay is offering me 1,000 per acre signing bonus and 1/5 of the royalties. I am meeting with them this evening to ask questions. If I am satisfied with the answers to my questions I will sign the paperwork. Does anyone have any advice as to the questions I should ask? Is 1,000 per acre enough? Is 1/5 royalties enough?
Make sure that you have any paperwork submitted to you reviewed by a good oil and gas attorney prior to signing anything.
Too many people rush into these agreements without really considering that whatever terms they agree to today will encumber their land/minerals/heirs for decades to come.
Take the proper time to get your contract done properly as many of the terms, surface protections, back end provisions for your deal are all negotiable points.
You will likely have one chance to get this all right, so don't allow yourself to be rushed into signing anything without first giving it proper review and without first negotiating to protect your own interests.
The attached files are a starting reference point to give you some pointers on things to consider in your negotiations.
Good luck.
3034-jfhintsonlease1997.pdf (170 KB) 3035-oilgasleasechecklist.pdf (20.1 KB)
Hello DJG,
I have not spoken to an attorney but I guess I should. I already made one mistake as I assumed that the lease was only for five years and if I didn't like the treatment I recieved I just would not renew the lease. After reading the info you sent me it seems they could tie me up for a while especially if they start producing oil. Thank you for the information as it has helped me to decide to cancle this evenings meeting until I speak to an oil & gas attorney. Do you know a good local attorney? I live in Houston right now and only go to the ranch on weekends. Thanks again for your help I hope you had very merry Christmas and have a Happy New Year.
DJG said:
Make sure that you have any paperwork submitted to you reviewed by a good oil and gas attorney prior to signing anything.
Too many people rush into these agreements without really considering that whatever terms they agree to today will encumber their land/minerals/heirs for decades to come.
Take the proper time to get your contract done properly as many of the terms, surface protections, back end provisions for your deal are all negotiable points.
You will likely have one chance to get this all right, so don't allow yourself to be rushed into signing anything without first giving it proper review and without first negotiating to protect your own interests.
The attached files are a starting reference point to give you some pointers on things to consider in your negotiations.
Good luck.
Frank,
It certainly would not hurt to talk with them tonight, just don't actually sign anything until after having had it all reviewed.
Most initial lease offers these days have been 3 year primary terms + an option to extend an additional 2 years. Would certainly look at having the option to renew removed from the offer as it is generally never in the mineral owners interest. Much better to look at a 3 year or even 2 year primary term only and then if they still would want to renew the lease then you can do that AFTER the primary term has expired and at the then current market conditions which will likely be better terms.
Also, by limiting the initial term and removing the option to renew you are increasing your odds of actually getting your acreage drilled and into production sooner as the company would be needing to drill your minerals prior to the primary expiration term in order to get your lands held by production.
Once that first well is drilled, then your lease terms will be set by your contract for as long as that well is producing which - in reality - could be many decades into the future.
Frank Rickman said:
Hello DJG,
I have not spoken to an attorney but I guess I should. I already made one mistake as I assumed that the lease was only for five years and if I didn't like the treatment I recieved I just would not renew the lease. After reading the info you sent me it seems they could tie me up for a while especially if they start producing oil. Thank you for the information as it has helped me to decide to cancle this evenings meeting until I speak to an oil & gas attorney. Do you know a good local attorney? I live in Houston right now and only go to the ranch on weekends. Thanks again for your help I hope you had very merry Christmas and have a Happy New Year.
DJG said:Make sure that you have any paperwork submitted to you reviewed by a good oil and gas attorney prior to signing anything.
Too many people rush into these agreements without really considering that whatever terms they agree to today will encumber their land/minerals/heirs for decades to come.
Take the proper time to get your contract done properly as many of the terms, surface protections, back end provisions for your deal are all negotiable points.
You will likely have one chance to get this all right, so don't allow yourself to be rushed into signing anything without first giving it proper review and without first negotiating to protect your own interests.
The attached files are a starting reference point to give you some pointers on things to consider in your negotiations.
Good luck.
Mr. Rickman,
Many of the folks in your area of Southern Fayette have used the local attorney in Flatonia, Steinhauser. This is not an endorsement. We personally used an oil and gas attorney in Houston that we knew but most of our neighbors here in Fayette did use Steinhauser.
You are aware that Southern Bay has been permitted to drill just east of Flatonia and it is a pool of almost 900 acres with many landowners involved? There is a link to that permit on the other Fayette County forum here on this site and you may already know some of the owners involved in that lease. You could talk to some of them. The names are on the papers filed.